Cummins to Acquire Jacobs Vehicle Systems

Cummins (CMI) has reached an agreement to acquire Jacobs Vehicle Systems (JVS). The acquisition is expected to close before year-end, subject to customary closing conditions.

Cummins is an Indiana-based designer, manufacturer, and supplier of diesel and natural gas engines.

Acquisition of JVS

With the acquisition, Cummins is poised to gain access to valuable new technologies and should strengthen Cummins’ advanced diesel engine platform development. It should also help the company secure valuable USMCA (The U.S. – Mexico – Canada Agreement) qualified engine components while also enhancing Cummins Turbo Technologies’ success.

The acquisition marks a step forward for Cummins’ zero emissions strategy to reduce greenhouse gas emissions. A Focus on engine braking and cylinder deactivation will be key in allowing the company to meet current and future emissions regulations.

Following the acquisition, Cummins is to maintain all JVS’ customer relationships. It also plans to offer improved value and additional benefits to clients of both companies. Cummins plans to increase capacity and resources into JVS’ two manufacturing facilities in the U.S. and China.

Analysts’ Take

UBS analyst Steven Fisher recently maintained a Buy rating on the stock but reduced the price target to $260 from $270. Fisher’s lowered price target suggests 15.30% upside potential.

Consensus among analysts is a Moderate Buy based on 3 Buys and 4 Holds. The average Cummins price target of $266.86 implies 18.34% upside potential to current levels.

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